Office 365 to Partners: “Lower your shields and surrender your clients. Your culture will adapt to service us. Resistance is futile.”
There, I saved you an hour and a trip to Los Angeles for Microsoft WPC.
Several years ago when Microsoft first announced their cloud ambitions they briefed the press using the term co-ownership. Under this new concept, Microsoft and the Microsoft Partner (ie, you) would co-own the client: Microsoft would service, bill, support and well.. do everything – you would get a 6% commission for nodding when the client asked if the product would fit their needs. Effectively, it was a license to kill the Microsoft Infrastructure Partner.
If you didn’t tune in to the Office 365 launch here is the summary:
The eulogy was delivered by Ballmer himself who no fewer than 14 times repeated that Office 365 is something you don’t need an IT department or an IT person to do. The message to the partner base was clearer than ever:
There is an opportunity to build a business around migrating clients from their old “need IT help” solution into the Microsoft cloud. Then climb on in and close down the lid.
Take it on and it will be your last IT project ever. This is the end of you.
The Start of YOU
The introduction to this post isn’t meant to smear Microsoft or shine a negative light on their business model, frankly this is the best option they have and in my humble opinion the correct one. It’s also nothing new. The world of technology is turning towards services – you don’t get to pad a cell phone bill with a 100% margin. Unless your clients are unusually bad at math – you don’t get to lease them hardware at an insane margin or the kind of interest rate that required the act of congress to limit banks from charging. You don’t get to build an enterprise network in a small business and make them pay Fortune 500 fees for running their IT. We have all built our businesses on that but there are two problems with it:
1. The pool of stupid people is shrinking. Ten years ago you needed an associate degree in MIS to send and print an email. Now your grandma does it from her phone.
2. The number of options and alternatives is growing. Ten years ago you had to build a network and you had a choice of one telco provider. Today you have at least four and that’s just in your pocket. And you don’t need to read an O’Reilly book to get to the Internet, you can go to a Verizon store.
Don’t take it personal, Microsoft didn’t build this coffin for you. Microsoft built it for Google Apps. Google Apps on the other hand built it to support their search business. The string of .com’s and Web 2.0’s and giant telco and media and entertainment companies that benefited from connectivity that we all wanted and we all willingly paid for.. for the simple human need for a sense of belonging (in geek terms: connectivity).
For all intents and purposes, this is a good thing. It’s time to accept it and move on – don’t sit there asking for Microsoft to let you bill the client, don’t sit there and blame them for excluding you from their products and most of all – don’t wait for someone else to solve the problem that isn’t theirs.
But some of you can’t let go of Microsoft. Here are Top 10 reasons why Microsoft should not allow partners into Office 365:
1. Control of experience: This isn’t a matter of controlling the billing, it’s a matter of controlling the experience. Microsoft is responsible for the promotion, sale, support and upselling the clients through their system.
2. Upselling: Microsoft has not been extremely successful with it’s partner base loyalty beyond what they built: Office and Windows. If Microsoft pulls off #1 well it stands to reason that it’s other properties will do much better without partners trying to pull the client towards the solution they get most margin on. (Hint: Notice how many times you saw Windows Phone yesterday?)
3. Cross Selling: Microsoft is more than Office 365. It has always had the ambition of becoming everything to everyone but it has always had partners that stood in their way – from infrastructure to hardware to service provider – everyone always wanted their logo there. If Office 360 works out, it would be easier to position hardware, services, consulting and more.
4. Ground Rules: In the traditional network, IT department calls the shots. In Office 360, Microsoft does. Their terms. Their rules. Their features. Their network maintenance levels. By removing intermediaries, things become much simpler.
5. Patents, Patents, Patents: Microsoft is the richest software company on the planet and thereby the biggest target of patent lawsuits. When you’re playing in an open market you have to step on some toes to gain share – when you police the ocean (Office 365) you can easily keep others out.
6. Revenue Flexibility: With Microsoft controlling the billing and the client, they can control the price and the offering. Microsoft’s entire business model is built on multiple revenue streams off the same code base. With ultimate control comes the ability to tier the cloud and make even more money as companies get bigger.
7. Migration non-interference: Microsoft’s name is on the bill – it’s who you call when you have a question or need advice. Microsoft will never sell a migration from Office 365 to IBM’s hosted Lotus Notes solution.
8. Identity: Remember Microsoft Hailstorm? By having complete control of the client they have complete control of each licensed seat’s identity: One that extends to their Xbox, Bing, Windows Phone, etc. At this point features become irrelevant: You’re more likely to buy something that fits than something that looks cool or fits the business model a little better.
9. Simplicity: Microsoft beat Apple by being open and allowing everyone that could write drivers to use their system. By locking out partners here Microsoft becomes that trusted advisor: Recommending apps, solutions, implementations and even suggesting your vacation. They don’t have to fight their way past the IT department to roll out ActiveX controls or the next technology they want to.
10. Borg: The collective has not been growing. Look at Microsoft’s 10 year stock chart and you can see why people are starting to demand Ballmers head and why so many in the Microsoft’s leadership have been sacked. Cloud bet is huge and partner resistence is futile – Microsoft wants to own SMB computing. At 90% they pretty much fulfilled Bill Gates vision of every computer running a Microsoft OS – but for the price to climb to fulfill Steve Ballmers vision of maximized shareholder value – everyone must be assimilated.
You’ve got the same story over at Google. So go ahead channel, resell Microsoft and Google – I dare you!
Of course, things are only this simple if we ignore the reality.
Picture is worth a thousand words:
You see, the Google & Microsoft & Apple vision only holds up in their marketing.
In the real world where most computers are s#@(, applications are written in India and business owners are cheap trying to save $100 on their Internet connection the same day they have to decide if they want to drop $8,000 for the Dayona seats in their Ferrari (don’t hate, I told you this stuff was gonna happen in 2007) the computing experience tends to suck.
Yet, millions and millions of people bought an iPhone despite the fact it’s the most locked down solution and just about the only phone whose worst feature is it’s ability to place a phone call.
The point here is that there are years upon years of profitable IT business to be done if you stop focusing on what everyone else is doing and start thinking about what you can do.
Now to all my Microsoft friends and their managers that got this forwarded to them, here is your problem.
Your partner base feels they brought you to this point and that you’re being outright rude to lock us out of your success because we’ve been abused as your customer service department for years. For us, the argument is more emotional than it is factual. You’re dumping us and telling us that you’re gonna marry our best friend at the same time that you’re asking us to pay for your honeymoon trip in Tahiti.
Now that we all understand each other, let me say something that I’ve been saying for years.
The Start of YOU
Let’s face it friends, we’ve had it easy for years. Microsoft spent billions of dollars in marketing and making our clients want the solutions they were building. All we had to do is set it up and hope it doesn’t blow up at 9AM. Which it did. Again and again. But things got better.
As big of an opportunity as Microsoft sees in the cloud, I see an even bigger one for each and every one of us. What you sell now is not Microsoft or Windows or Android.
Now you’re selling you.
The focal point is no longer the solution. No longer the price. No longer the business card with the trail of software vendors and certifications nobody but IT staff has ever heard of. The focal point is you.
“I’m going to get you everything you need. If you don’t like it, I’ll bring you something else. The point is, you’re paying me so you don’t have to do it yourself. And my time costs a heck of a lot less than yours and I’m going to make sure it stays that way.”
In the Fortune 500 marketing, Microsoft is fighting with Google who is fighting with Apple who is fighting with Samsung and they are all fighting for a market dominance 10 years from now.
My name is Vlad and I’m here to help you build your cloud business today, the same way I do for over 20,000 other IT businesses. Go here. Then email me at firstname.lastname@example.org. We let you control the billing, the solution, the features, the implementation and if you’re insane enough – the maintenance cycle itself. It’s the cloud on your terms on your brand and your price. We just take on the responsibility to keep it up, back you with an SLA, financial and legal liability and one more thing – We’ve been doing it for 14 years.
It’s time we all thank Microsoft for a great ride and amazing software and solutions. But now it’s time we take it from here ourselves and accept that partnerships don’t last forever and business is a game of strategy and opportunity – and in my unbiased and humble opinion – I’ve got one.